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3. Read to Learn
Explain the steps involved in the financial planning process.
Identify sources of financial information.
Discuss sources of risk.
Discuss the consequences of choices.

4. The Main Idea
Financial planning provides a solid foundation for making financial decisions. It involves looking at your financial position and setting goals.

5. Key Concepts
Making Financial Decisions
Sources of Financial Information
Understanding Risk
Consequences of Choices

6. Key Terms
spending, saving, and investing your money so you can enjoy the kind of life you want, along with financial security
personal financial planning
goals
the things you want to accomplish

7. Key Terms
opportunity cost
what you give up when you make one choice instead of another

8. Making Financial Decisions
Personal financial planning will help you reach your goals.
personal financial planning
spending, saving, and investing your money so you can enjoy the kind of life you want, along with financial security
goals
the things you want to accomplish

9. Graphic Organizer 1 2 3 4 5 6 The Six Steps of Financial Planning
Determine Your Financial Situation
Develop Your Financial Goals
Identify Possible Courses of Action
Evaluate Your Alternatives
Implement a Financial Plan of Action
Review and Revise Your Plan

10. Step 1: Determine Your Financial Situation
Make a list to help you determine your financial situation.
My Financial Situation
Savings
Monthly Income
Monthly Expenses
Debts

11. Step 2: Develop Your Financial Goals
You need to think about your attitude toward money.
My Attitude Toward Money
Do I want to spend money now or save for the future?
What are my wants and needs?
Do I want to get a job right after high school or continue my education?

12. Step 3: Identify Possible Courses of Action
Consider your options before making a decision.

13. Step 4: Evaluate Your Alternatives
Use sources of financial information to help you evaluate your alternatives.
Consider the consequences and risks of each decision you make.

14. Step 5: Implement a Financial Plan of Action
A plan of action is a list of ways to achieve your financial goals.
If your goal is to increase your savings, a plan of action could be to cut back on spending, or get a part-time job.

15. Step 6: Review and Revise Your Plan
As you get older, your finances and needs will change.
You should reevaluate and revise your financial plan every year.

16. Making Money
The most common way for teens to earn money is through an allowance. However, many teens do not get an allowance. Some other ways to get money may be by doing work around the house, or as a reward for receiving good grades.

17. Sources of Financial Information
Sources of financial information include:
The Internet
Magazines
Newspapers

18. Graphic Organizer Internet Magazines Newspapers
Sources of Financial Information
Internet
Magazines
Newspapers
Companies put facts about their company and financial situation on their Web sites.
BusinessWeek
Time
U.S. News & World Report
Wall Street Journal
New York Times
Financial Times

19. Understanding Risk
When you make a financial decision, you also accept certain risk.
You need to understand which risks you can afford to take and which ones you cannot.

20. Understanding Risk
Insurance and diversification of your assets are two ways to minimize risk.

21. Types of Financial Risk
Graphic Organizer
Inflation Risk
Liquidity Risk
Interest Rate Risk
Types of Financial Risk
Personal Risk
Income Risk

22. Consequences of Choices
An opportunity cost is sometimes called a tradeoff.
opportunity cost
what you give up when you make one choice instead of another

23. Consequences of Choices
Choosing between alternatives involves not only knowing what you forgo.
Choosing between alternatives also involves knowing what you gain.

24. What are some examples of long-range goals that consumers may have?
getting a college education, buying a car, or starting a business

25. List the steps of the financial planning process.
determine your financial situation, develop your financial goals, identify alternative courses of action, evaluate your alternatives, create and use your financial plan of action, and review and revise your plan

26. Name some types of financial risk.
inflation risk, interest rate risk, income risk, personal risk, and liquidity risk

27. End of